‘Top rate’ savings account offers 2.55 percent – can you apply?

Martin Lewis advises on savings accounts and premium bonds

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This savings account offers savers a “top rate” and may entice them to take advantage of their ISA allowance. Savers will need £100 to open an account and it could help them save a large amount of money without having to pay tax.

When it comes to choosing between savings accounts and ISAs, the general rule of thumb is that ISAs are better for saving large amounts of money.

During the 2022 to 2023 tax year, Britons can save up to £20,000 tax free by using their ISA allowance.

Typically, ISAs aren’t easy to access, which means it can be difficult for people to feel comfortable putting money into an ISA in case something goes wrong.

Withdrawals and transfers from the account are allowed, although they will be subject to 60 days’ loss of interest on an amount equivalent to that withdrawn/transferred.

This means that might get back less than they originally deposited.

The account will mature at midnight on October, 31 2023.

On the day after maturity, an individual’s funds (including interest) will be automatically transferred to an instant access Cash ISA maturity account, unless they provide alternative instructions.

If someone deposits £1,000 into the account and they do not make any withdrawals, they will receive an interest payment of £25.50 at the end of the fixed term October, 31 2023.

Their overall account balance will therefore be £1,025.50.

Commenting on the deal, Rachel Springall, finance expert at Moneyfacts, said: “Leeds Building Society has launched a new issue of its 1 Year Fixed Rate Cash ISA this week, which pays 0.65 percent more than its predecessor.

“Paying 2.55 percent, the deal takes a prominent position in the top rate tables and may well entice savers looking to take advantage of their ISA allowance.

“Savers can invest from £100 and make transfers in from cash or stocks and shares ISAs, plus they can access their cash early if they so wish, subject to an interest penalty.

“The deal earns an Excellent Moneyfacts product rating.”

Britons can open an account by visiting one of the branches, via their branches or by post.

The maximum people can invest in the 2022/2023 tax year is £20,000.

They must not exceed the ISA limits in any one tax year.

Britons can transfer in some or all of your previous tax years’ savings without affecting their annual allowance for the current tax year, subject to the terms and conditions of their existing account.

LBS key product details:

  • Rate: 2.55 percent gross / 2.55 percent AER payable on maturity
  • Notice / term: Fixed to 31.10.23
  • Minimum opening amount: £100
  • Maximum investment amount: ISA allowance
  • Access: Early access on 60-day loss of interest penalty
  • Further additions: Permitted, until 31.10.22
  • Transfers in: Permitted. Accepts cash or stocks and shares ISAs
  • Transfers out: Permitted, subject to 60-day loss of interest penalty
  • Opening account: Online, by post or in branch
  • Managing account: In branch or by post
  • Other information: Minimum applicant age 16.

The Bank of England base rate has increased to 1.75 percent.

Following the rise, many banks have increased the interest given on savings account so Britons are encouraged to look around to find the best deals for them.

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